How the post-Brexit trade deal will affect British farmers

The UK’s Brexit deal could be a make or break scenario for Britain’s farmers, according to a study published by the Agri-Food and Biosciences Institute (AFBI) on Wednesday (16 August).

Changes to the UK’s trading relationship with the EU and other global partners once it leaves the single market and customs union could have a major impact on trade flows.

The independent study analysed the impact of three different post-Brexit trade scenarios on agricultural commodity prices in the UK, the volumes farmers produce and the prices they command.

While some post-Brexit changes may lead to lower costs for consumers, they could also slash farm incomes and increase Britain’s reliance on food imports, according to AFBI.

Three scenarios

The three post-Brexit scenarios analysed by the think tank were: a favourable bespoke free trade agreement with the EU, a switch to World Trade Organisation (WTO) rules with Most Favoured Nation (MFN) tariffs and unilateral trade liberalisation.

Britain’s Brexit negotiating team, led by David Davis, is aiming to strike a free trade agreement (FTA) with Brussels as soon as possible after leaving the EU. This would allow the UK to negotiate its own trade agreements with other countries while retaining many of the benefits of free trade with the bloc’s 27 countries, such as tariff and quota free access to the single market.

Under a bespoke FTA scenario, the prices received by farmers for their goods (producer price) would remain largely unchanged, varying from -1% to +3% depending on the commodity. According to the study, this would not be enough to cause significant changes to the total quantity or value of British farm produce. Nor would it have a major impact on consumer prices.

Britain’s withdrawal from the EU undoubtedly carries risks but it may also create the opportunity to build a greener, more efficient, and innovative farming sector. If this happens, Ngaire Woods argues, the EU and other economies might follow suit.

However, it may not be possible to negotiate such an in-depth deal in the time available, and farmers are demanding certainty. Meurig Raymond, the president of the farmers union NFU, said: “It’s essential that the government prepare transitional arrangements to avoid a cliff-edge scenario. Farming businesses will need time to adjust to new trading environments.”

“It is vital that the government is very clear on what success looks like for British food and farming. Achieving the right trade deal will be pivotal to many farming businesses and the country’s ability to produce food,” he added

WTO rules a mixed bag

If EU and British negotiators fail to reach a post-Brexit trade agreement before the talks end on 29 March 2019, all UK-EU trade will revert to WTO rules.

Britain currently imports about 40% of its food and its biggest market for both imports and exports of food products is the EU. Even with MFN status, trade tariffs would be high, and AFBI believes this would lead to significant changes in the flow of trade.

Under this scenario, the UK could expect to see significant producer price increases for some commodities, especially milk and dairy (+30%), pigs (+18%) and beef (+17%), with corresponding gains in production volume and output value, according to the think tank. This would boost the UK’s self-sufficiency in these sectors as EU imports became more expensive, but would also drastically increase consumer prices.

However, tariffs would undermine the competitiveness of Britain’s big export commodities. Farmers producing sheep (producer price -30%), wheat (-4%) and barley (-5%) would suffer income losses and the total volume of production would fall.

Britain said on Thursday (17 August) it was “confident” talks with the European Union would move towards discussing their future relationship by October, in contrast to warnings from the top EU negotiator that the target is receding.

Prime Minister Theresa May’s …

Unilateral liberalisation

In its final scenario, AFBI modelled what would happen if the British government abolished all tariffs on food imports, while the UK’s trading partners kept MFN tariffs on UK exports.

Such a move would slash prices for UK consumers by opening the market to cheap imports from around the world, but British farmers would suffer as a result.

Producer prices for beef would fall by 45% and sheep by 29%. While these are the most extreme cases, the price, production volume and output value of all British agricultural commodities would fall significantly, the study said.

Raymond warned against such an outcome, arguing that the British government should ensure that “UK farmers are not put at a competitive disadvantage to overseas producers subject to different standards”.

The think tank stressed that producers elsewhere in the world are very competitive and that these results “strongly indicate that there is a more pressing need to improve domestic productivity and competitiveness under this trade scenario”.

EURACTIV.com spoke to young British farmers at the 2016 Lincolnshire Show, just before the EU referendum on 23 June. Most showed strong interest for Brexit and linked their rejection of the EU to glyphosate.

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Comments

4 responses to “How the post-Brexit trade deal will affect British farmers”

If we scrap all tariffs & maintain grants for our farmers for a set period the only cliff edge will be the one faced by EU farmers unable to compete with those beyond the shores of the EU for access to UK consumers. Set in place a sunset clause for those we give unfettered access to to liberalise their markets to competition from UK farmers or they lose their access to our market place. New Zealand and Australia went off a cliff edge when we joined the EU and soon got over it and more importantly have thrived

That’s a big if, maintaining grants, what with the state of the UK economy and our sovereign debt. The UK government I believe has only stated that it will maintain grants until trade agreements have been negotiated with the EU and others and then wait and see. The problem here is that farming can not be turned on and off like a tap and needs some kind of positive answer good or bad.

I think you also forget or are perhaps not old enough to remember that guaranteed food availability and sustainable agriculture was one of the main impetus for setting up the Common Market in the first place and as such the farming community within the EU maintains a strong voice within it, maybe not as strong as at the outset but nevertheless still potent. When push comes to shove the EU will, in whatever shape or form It takes, ensure the viability of its farming industry.

Australia and New Zealand were rightly hit for six when we joined the Common Market in ’73 as you state but you forget to mention that a great many farmers went to the wall and most certainly did not “soon get over it”.

Their industry had to restructure itself such that productivity and efficiency were paramount often to the detriment of the environment as we would know it with massive use of artificial fertilisers and the such. They also sought alternative markets and for their lamb the Arab states came to the fore. Diversification into products like grapes for both wine and consumption plus fruit also became more prominent I believe.

Farming per se faces some tough times not least because as I mentioned earlier the industry needs to plan years ahead, a sudden cliff edge Brexit therefore could well be catastrophic for the industry especially if no grants/subsidies are forthcoming from the UK government, i.e. we taxpayers.